Raids / Search / Seizure - Central Excise Practice Manual (OLD) - Central Excise

RAIDS/ SEARCH AND SEIZURE Provisions of 'Search' and 'Seizure' are used by the Central Excise officers to enforce the provisions of the Central Excise Law. These provisions are used as an exception when the direct physical intervention becomes necessary in order to check evasion of tax. Search and raid is one and the same thing. Provisions regarding search and seizure are contained in section 18 of CEA, 1944, which provides that all searches and seizures should be made in accordance with the provisions of 'Code of Criminal Procedure'. Further, section 12 of the central excise act, 1944 empowers the Central Government to apply the provisions of Customs Act to the Central Excise also vide Notification No. 68/63. The provisions of Customs Act which are applicable to Excise act also are, section 105(1), 110, 115, 118(a), 119, 120, 121, 124, 142(1)(b), and 150. Raid/ Search Rules 22 and 23 or CE Rules, 2002, empower the authorized officer to enter and search any premises, conveyance or other place. Authority to search - As per said Rules and section 105 of customs Act any central excise officer not below the rank of Inspector may, duly authorized by the AC/ DC of central excise or he may himself, search for such goods, documents or things or stop and search conveyance, where he has reason to believe that excisable goods are manufactured, stored or carried in contravention of the provisions of the Act or Rules. The search is to be carried out in the presence of two independent witnesses. Search warrant - Normally Search is to be carried out by way of 'search warrant' issued and signed by AC/DC of central excise under his seal. Following are the requirements of search warrant: - · Search warrant should indicate the place to be searched. · Search warrant should be shown to the person in-charge of the premises and his signature should be obtained. However in the following cases search can be carried out without a search warrant: - · For registered premises, or · For stopping and searching any conveyance, or · For urgent necessity. Provisions to carry out search: - The requirements to carry out search are laid down under section 165 and 100 of 'code of criminal procedure'. These are: - · Reason to believe - The officer making investigation should have 'reasons to believe' that anything necessary may be found for carrying out investigation, from the place of search falling within his jurisdiction, which otherwise cannot be found on time. But mere suspicion, gossip, whim or guess is not adequate to order a search. There must be reasonable belief or reasonable evidence. Sufficiency of 'reasonable belief' cannot be challenged before the court as court cannot sit in appeal in regard to this question. Court can only see whether there was ground which, prima facie justified the said reasonable belief. · The officer should record such reasons in writing and specify the things for which search is to be made. · The officer should either himself carry out the search or he may authorize in writing any officer subordinate to him to carry out the search. · Copy of the above record shall be furnished with the Magistrate and also to the owner or occupier of the place searched for free, if applies for the same. · Person in-charge of the place to be searched shall allow the officers free access and all reasonable facilities for a search on production of search warrant; otherwise officer himself can break or open any door or window. · Search of once body can be made. In case of woman, search shall be made only by another woman with strict regard to decency. · Presence of witness - The search is to be carried out in the presence of two independent witnesses of the same locality or of any other locality. Refusing to act as witness without reasonable cause is an offence under section 187 of IPC. · An order in writing can be issued to a person to act as a witness. The witnesses however, are not required to attend the court, unless, specifically summoned by the court. · List of the things seized and places where they were found shall be prepared by officer and signed by witnesses. Such list shall be delivered to the person searched or in-charge of the place. Illegal search - If the search is not carried out as per prescribed procedure, the same shall be regarded illegal. But this illegality will not affect the validity of seizure and further investigation and validity of trial and hence there is no use of proving the illegality of the search. However, if under such search any illicit article is seized, this cannot be used as an evidence to prove the unlawful possession of any goods or thing etc. by the accused. However, besides illicit article, any other article seized may be relied upon by prosecution in further proceedings. But irregularity in search would cast duty on court to scrutinize the evidence very carefully. Vexatious search - 'Vexatious search' means searching without any reasonable ground or unnecessarily seizing any property or committing injury to the person without any reason. Section 22 of CEA provides that in case of vexatious search and seizure, the officer is punishable with fine upto Rs.2000 and any person giving false information causing such seizure or arrest, will be punishable with fine upto Rs.2000 and imprisonment upto 2 years or with both. Seizure Rule 24 of CE Rules, 2002 and section 110 of Customs Act, empower the authorized officer of central excise to detain or seize the goods, if found liable for confiscation. Goods can be seized by any officer not below the rank of Superintendent. Goods can be seized anywhere in India irrespective of the place of offence. However adjudication will be done at the place of offence only. Requirements for seizure of goods or provisions of section 110 of Customs Act - · List of the goods seized called 'Panchnama' shall be prepared and signed by the witnesses and handed it over on the spot to the person from whom goods are seized. There is no requirement that person from whom goods are seized shall also sign the panchnama. · Seized goods shall be carried away and handed over to police station. If there is not enough space in police station, these can be kept with the following also: - - In the custody of the central excise officer, or - In the possession of the owner by obtaining guarantee for the safe custody. The owner cannot deal with such goods without permission of the officer. In such cases samples may be drawn by the officer. Release/ return of seized goods - I. Provisional release of seized goods: - The goods and vehicles seized can be released provisionally by the excise officer on fulfillment of the conditions. · Both goods and vehicle can be released under bond (bond in Form no. B-4/ B-11) and with security of about 25%. · Amount of Bond and percentage of security will be decided by the adjudicating authority. Normally amount of bond is equal to the value of the goods or vehicle seized and security deposit depends upon the extent of offence. · Bond is accepted by Superintendent. · Goods can be released by adjudicating authority while vehicles can be released by the AC/ DC of central excise. · The adjudicating officer, will ask the owner or in-charge of the goods to whom the goods are released provisionally, to produce the goods any time before the issue of adjudication order, if he is of the view that the goods are liable for confiscation. In case the person fails to produce the goods at appointed time, the bond may be enforced for recovering the amount due. II. Return of seized goods if no Show Cause Notice: - As per section 110(2) of Customs Act, if no show cause notice is issued within 6 months, the goods shall be returned to the owner of the goods, even if no application is made by the owner of the goods as this is a mandatory requirement. · As per section 124 of customs Act, if seized goods are liable for confiscation, a show cause notice has to be issued to the person from whom the goods are seized giving him grounds for confiscation, and than asking his representation and giving him opportunity of personal hearing. · This period can be further extended by 6 months by Commissioner of central excise on sufficient cause and then give a post-decisional hearing to decide whether extension should be cancelled or not. Such extension can be approved only after giving opportunity of being heard to the affected party. If period is not extended before it is over, the goods are required to be returned. · Order of commissioner extending period of 6 months is 'adjudicating order' and thus is appealable. · Even if goods are returned, these can be confiscated in the adjudication proceedings. If goods are not available for confiscation, redemption fine can be recovered through bond but penalty cannot be imposed. Other points to be noted with regard to the seizure - · No storage charges can be imposed, on the person from whom goods are seized, by the department as there is no rule or regulation for this under the Act. · Revenue intelligence officer can intervene and detain goods even after assessment is completed. · Sealing of Godown and removing of account books amounts to seizure as per section 110 0f Customs Act. · Not only goods, documents relevant for further proceedings can also be seized. The person from whom the documents are seized can take extracts therefrom in presence of central excise officer not below the rank of sub-inspector. With respect to returning of documents seized, the department after issuing of show cause notice is required to return the only the documents which are not relied upon under proper receipt and in respect of documents which are relied upon, the assessee should be permitted to obtain Xerox copies for his use. · Duty paid goods should not be seized. Also CBEC has issued guidelines that if the violation is technical in nature, goods should not be seized. However in such cases offences and penalty may be imposed, wherever required. · If after adjudication case is decided in favour of assessee, seized goods will be returned to the person from whom goods were seized. · Where goods are of perishable nature, such goods are disposed off immediately by officers, before the adjudication order is passed, as per prescribed procedure. However, if finally after adjudication, goods are not confiscated or case is decided in favour of assessee, the market value of the goods must be returned and not only sale proceeds.